Are Zillow Flex agents required to send buyers to Zillow Home Loans?

The hits against residential real estate listing portal giant Zillow keep coming. On Tuesday, The Capitol Forum published a report claiming that their research and reporting shows that Zillow’s Flex program could violate the Real Estate Settlement Procedures Act (RESPA). 

According to the report, agents, many of whom were former Zillow Flex agents, told The Capitol Forum that Zillow requires Flex agents to steer homebuyers to use Zillow Home Loans (ZHL) for their financing needs. Agents involved in Zillow Flex pay a percentage of their commission — typically between 25% and 40% — once the transaction closes. This enables teams and top agents to receive a stream of leads at no upfront cost. 

The agents interviewed told the publication that teams who are part of the Flex program must refer a certain number of homebuyer client leads obtained through the program to ZHL. According to The Capitol Forum, this requirement was previously met by prospective buyers having a short phone call with a ZHL agent. However, agents say that this requirement was recently tightened, requiring buyers to obtain loan preapprovals. 

An agent in Texas told The Capitol Forum that roughly 10% of leads obtained through the Flex program must receive a loan preapproval. Note that just because a buyer is preapproved by a specific lender, it does not mean that they have to use that lender to purchase a property.

If this requirement is not met, agents say that Zillow reduces the number of leads their team receives. If teams repeatedly fail to hit this quota, agents told the publication that Zillow kicks their team out of the Zillow Flex program. In contrast, agents say that teams that meet or surpass the requirements are rewarded with more and better leads. 

A Zillow spokesperson clarified that there are a number of factors Zillow considers and several requirements an agent must meet to be part of the Zillow Flex program.

According to the report, Zillow Flex has a team leaderboard that ranks agents by their predicted conversion rate and how many ZHL preapprovals they have obtained. 

Agents who spoke with The Capitol Forum, said they feel this requirement is a breach of RESPA as agents do not disclose that they are incentivized to push homebuyers toward using a ZHL financing product. Real estate professionals quoted in the article said they feel like they are being “forced” to connect buyers to ZHL and to sell ZHL services. 

In addition, agents said they think that buyers, and especially first-time buyers, who utilize a ZHL product could be financially harmed as they say ZHL does not offer the same rebate programs or non-traditional mortgage products. 

Agents also said that Zillow asks them to manage the Flex lead buyers through the Zillow app or CRM platform Follow Up Boss, which is owned by Zillow Group. The agents interviewed said they feel this enables Zillow to keep watch over how they handle these leads.

In an emailed statement to HousingWire, a Zillow spokesperson wrote that the company is “always focused on providing the best experience possible for consumers looking to buy, sell, rent and finance,” and is guided by its “commitment to operate responsibly and in accordance with applicable laws.”

“Our approach prioritizes transparency and consumer choice, ensuring consumers receive the information and services they want and ask for at the right time throughout their real estate journey,” the spokesperson wrote. “Through our strong partnerships with real estate agents, ongoing product innovation and steadfast advocacy for consumers, we continue to set a high standard for responsible engagement across the real estate industry.”